Amazon agrees to $2.5 billion settlement with FTC
WASHINGTON – Amazon has agreed to a $2.5 billion settlement with the Federal Trade Commission in a case in which the agency accused the online retailer of using deceptive methods to sign up consumers for its Prime subscriptions and then made it challenging to cancel.
The FTC said documents uncovered in the lead up to a trial indicated that Amazon executives and employees discussed the “unlawful enrollment and cancellation issues,” using comments like “subscription driving is a bit of a shady world” and leading consumers to unwanted subscriptions is “an unspoken cancer.”
The case alleged Amazon enrolled “millions of consumers in Prime subscriptions without their consent” and went on to say the retailer made it difficult to cancel the $139 a year service.
See also:
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Under the settlement, Amazon will pay a $1 billion civil penalty, provide $1.5 billion in refunds to impacted consumers and cease unlawful enrollment and cancellation services for Prime.
In addition to the company, the case included two Amazon executives: Neil Lindsay, senior vice president, and Jamil Ghani, vice president.
“The evidence showed that Amazon used sophisticated subscription traps designed to manipulate consumers into enrolling in Prime, and then made it exceedingly hard for consumers to end their subscription,” said Andrew N. Ferguson, chairman of the FTC. “Today, we are putting billions of dollars back into Americans’ pockets and making sure Amazon never does this again. The Trump-Vance FTC is committed to fighting back when companies try to cheat ordinary Americans out of their hard-earned pay.”
The FTC brought the case against Amazon in June 2023.
In addition to the monetary settlement, Amazon is required to make changes to the Prime enrollment, including a clear, conspicuous button for customer to decline Prime, instead of using a button that says “No, I don’t want free shipping.”
The retailer must also include disclosures about Prime terms that include pricing, date and frequency of charges and cancellation procedures, as well as easy way for consumers to cancel Prime subscription via the same method used to sign up. Amazon must also pay for an independent, third-party supervisor to monitor compliance with the consumer redress distribution process.
